Experts look into their economic crystal ball
PORT SPAIN
Trinidad & Tobago Express
Petroleumworldtt.com
12 31 08
While 2008 was rough, many predict the news in 2009 wont be all bad.
Despite the turmoil on the global financial market, the alarming gyrations in the price of oil and an international economic slowdown which affected everybody, most predict 2009 will be a more steady, less eventful year.
Like most stock markets around the world, the Trinidad and Tobago Stock Exchange saw a slowdown of activity this year.
Wain Iton, CEO of the TTSE said he hoped that stock trading would be re-energised early in the new year. However, he admitted he didn't think there would be that many movements in the first two quarters of 2009.
Managing Director of CMMB, Ram Ramesh agreed with Iton. He told the Business Express, "There is general uncertainty in the market and I don't see any major upward movement in the first six months of the year."
Ramcharan Kalicharan, Caribbean Money Market Brokers chief operating officer, also said the first few months of 2009 will be slow for the stock exchange, but he believes that it will pick up from this year's slump and companies will definitely do better in 2009.
While stock trading is projected to increase, inflation will be going down, or so they hope.
Chairman of the Banker's Association, Catherine Kumar said she thinks that methods the Central Bank is putting in place to mop up excess liquidity will reap some results this year.
Iton agrees. He said with international food prices decreasing in 2009, we should see an ease up of this country's ever increasing inflation rate. In fact, the Central Bank has already reported a decrease within the last month.
Ramesh added that with the cost of food and crude oil easing up, inflation which has been linked to food prices for the last year, will have no choice but to fizzle down.
As for real estate costs, well that's going down too.
Kalicharan, CMMB's COO, said the heated housing sector should cool down as during this year there will be less money in the country and like all other booms the housing boom will also taper down.
"With less money chasing real estate, and the price of raw material like steel and all that going down, the costs of real estate would go down, at least that would be the natural progression of things."
He believes that with no major demand for raw materials as the building boom settles down, the housing sector will also settle down.
Mikey Joseph, President of the Trinidad and Tobago Contractors' Association thinks the housing market has already taken to long too settle down.
But he says one factor that we need to look at is the cost of land, because high land prices help fuel high real estate costs. However, he said," What direction land prices will go in is anybody's guess."
Joseph also gave figures for the construction industry. He said by the beginning of 2009 the construction industry would contract by between 15 and 20 per cent. He also said that an estimated 2500 people soon will be unemployed as the sector begins to let people go.
The amount of interest we had to pay for car loans and house mortgages also moved upward in 2008. But in 2009, we may see them sliding down. Kalicharan believes that as the economy slows down, the Central Bank will drop the repo rate and the interest rates banks charge will subsequently fall.
While Kalicharan thinks interest rates will fall, he doesn't predict that the amount of people who become delinquent when paying their loans will decrease. In fact he thinks the figure will increase.
He said, "As things slow down and people are laid off and unemployment increases, the number of people who will be able to comfortably pay their loans will go down."
Loan default will climb in 2009, he predicts.
But Kumar, who is the managing director of one of the top regional banks said she thinks no change will be made in terms of the amount of people defaulting on their loans.
Though most disagreed on the majority of economic matters for 2009, one thing they all agreed on was that inflation would decrease once food prices continue to slump.
As for foreign direct investment all agreed it would lessen.
Economist Ramesh Sarabjit of the Ministry of Trade explained that all international forecasts have predicted the amount of funds coming into Latin America and the Caribbean will be reduced significantly. The amount, he said will be significantly lower than what came into the region in 2007 and 2008.
The general consensus on the price of crude oil was that prices would stabilise, at between US$25 and US$40 a barrel. But with the budgeted oil price for national expenditure being US$55, Ramesh predicted that the Government may also have to look to commercial banks in order to finance some of the work they will continue this year.
Story by Aretha Welch from Trinidad & Tobago
Express
Trinidad & Tobago Express
Wednesday, December 31st 2008
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